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VOIP (Telephony over the Internet) Continues To Revolutionize the Telecommunications Industry, Business and Industry Trends Analysis

Local exchange telephone companies continue to face a dismal market for landlines.  The popularity of smartphones is one reason, but another big threat to traditional phone lines is phone calls made over the internet.  The rapid proliferation of high-speed access to the internet in homes and offices makes internet-based telephony a logical next step for a wide variety of businesses and consumers.  Most newly installed telephone systems in mid-size to large business offices are based on Voice over Internet Protocol (VOIP), with virtually all telephone equipment manufacturers now offering VOIP equipment.  Likewise, massive numbers of consumers around the globe are adopting VOIP for their long-distance services, particularly via the extremely popular Skype service, which is owned by Microsoft.
The fact that phone service can be provided online enables cable companies to compete head-on with telephone companies, since cable offers internet service as well as entertainment programming.  Consequently, many households are subscribing to cable bundles that include VOIP, internet and entertainment/TV (and dropping their traditional landlines).
This makes cable companies major, direct competitors to traditional telephone companies.  The competitive landscape has become even more complicated now that software companies are also getting into VOIP-type services.  For example, WhatsApp, a global text messaging service owned by Facebook, offers VOIP features, putting it in direct competition with Skype.  Viber, part of Japan’s Rakuten, Inc., is another popular service used worldwide.
VOIP transforms phone calls into digital format, which is transmitted across the internet almost effortlessly and, more tellingly, cheaply.  Rapid growth is occurring outside the U.S., particularly in nations where very high-speed broadband is commonplace in homes and offices.  In emerging nations, VOIP growth has been fueled by its low cost.
Some VOIP services are essentially free of cost, or extremely inexpensive, but they offer limited services that often make or receive calls only with other members of the same service.  This is how Skype got started.  The strategy of Skype and similar firms has been to first offer free services, and then sell value-added subscriptions.
What a full-featured VOIP subscription offers is really a local telephone number bundled with long-distance service, at rates far cheaper than plans sold by other carriers, especially for international calls.  In addition, many VOIP providers do not charge extra fees for services such as voice mail, call-waiting, caller ID and do-not-disturb, which temporarily blocks calls from certain parties and directs them to voice mail.  Additional features are three-way calling as well as message retrieval and system settings via phone, web site or e-mail from any location worldwide.
A particularly interesting feature of VOIP service gives subscribers the ability to choose almost any area code as the prefix to their phone numbers.  This means that a business or home can be located in Portland, Oregon, for example, but have an area code for Miami, Florida.  This can be convenient for businesses that want to create local phone numbers for virtual locations in several cities or countries.  Both businesses and consumers have the ability to set up toll-free numbers via VOIP as well.
Google offers its Voice app, with all calls within the U.S. free of charge and international calls at low cost without roaming fees.  The service works using Wi-Fi networks.
Not surprisingly, there are a large number of players in the VOIP service market.  A leader in this technology is the Vonage, a New Jersey-based firm, which was acquired by Ericsson in July 2022.  In addition to relatively new firms like Vonage and Net2Phone, however, are the traditional telephone companies, such as Verizon and AT&T, as well as cable companies like Comcast.  These companies followed Vonage’s lead into VOIP, and all offer some type of VOIP service.
One of the more interesting players in VOIP is Skype.  Skype works on peer-to-peer technology; that is, users must download the free Skype software to their computers or smartphones.  They can then make VOIP calls to other computers that contain Skype software.  Several users may participate in a conference call at once.  Microsoft has integrated Skype’s features into many of its products, such as its extremely popular Xbox game machines.  Skype’s challenge was to move beyond the distribution of free software, in order to generate significant subscription-based fees.
VOIP service is already a highly competitive market.  Consequently, consumers can look forward to more new features and better service while prices drop.  It can be vastly cheaper to operate an internet-based phone company than a traditional landline provider, because VOIP service providers don’t have to invest in billions of dollars’ worth of telephone equipment—instead, they rely on the internet as the backbone of their services.  (Of course, this means that your VOIP telephone service is only as reliable as your internet connection.)

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